The euro dropped to a one-week low against the dollar amid speculation the region’s debt crisis may lead European Central Bank President Jean-Claude Trichet to signal a slower pace of interest-rate increases. The ECB announces its monetary-policy decision at 1:45 p.m. in Frankfurt and Trichet, whose term ends on October 31, holds a briefing 45 minutes later. All 55 economists surveyed by Bloomberg News expect the central bank to raise its benchmark rate by 25 basis points to 1.5 percent to contain price pressures, even as Greece threatens to become the region’s first sovereign default. Consumer-price inflation rose 2.7 percent from a year earlier in June. “It’s about what the ECB says about rate hikes going forward,” said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “If they say risks to inflation and growth have moved to the downside, the euro would be quite vulnerable. Euro-dollar has had a very tight correlation with rate spreads over the last year, and that’s set to continue.” The 17-nation currency slipped 0.2 percent to $1.4286 as of 8:47 a.m. in London, after earlier strengthening to $1.4348. It declined 0.1 percent to 115.70 yen and weakened 0.3 percent to 1.19881 Swiss francs, down from as strong as 1.20539. The common currency depreciated 0.5 percent after Trichet’s June 9 news conference, when he signalled the bank may increase rates today, while damping investor expectations for further moves by reiterating that inflation will fall below the ECB’s 2 percent limit next year. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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